How to write a floating holiday policy? [with free sample template]

What is a Floating Holiday policy?

A floating holiday policy elucidates the rules of availing floating holidays in your company, along with the list of preassigned floating holidays. It would talk about holiday notice, approval notice, the number of floating holidays available, and so on. It is provided along with the PTO policy and employees can access them from time off tracking software for reference.

Six things to keep in mind while writing a floating holiday policy

It is best to have a floating holiday policy that employees can access when in doubt. But before you create a floating holiday policy, here are some things to consider:

Eligibility criteria:
Explain who can utilize floating holidays - full-time employees, interns, contract employees, etc. Also, tell them how floating holidays will be allotted to employees who join in the middle of the year.
Number of days
Ideally, companies provide two floating holidays in a year that employees can use. They can use it on any day mentioned in the preassigned holidays to observe the holiday or simply spend time with their family.
List of preassigned holidays
Most companies choose to provide floating holidays on a few preassigned occasions, such as New year’s eve, Martin Luther King Jr. Day, Christmas eve, etc. Alternatively, you could provide it to mark a special occasion for the employee, i.e., their birthday, anniversary, etc.
Specifications on carryover and encashment
Be clear on how you will treat floating holidays when the employee resigns- Let them know if floating holidays can be encashed. If you allow carryover of floating holidays - let them know if there’s a limit on the number of floating holidays an employee can have in a given year.
Approval process
Explain the procedure of applying for floating holidays in detail. In case you use time off management software to track floating holidays, let them know how should they apply and the approval process for the same.
Blackout period
Blackout period refers to the work period where employees are expected to be present at work and not take time off. These are the crucial busy quarters where the business can achieve maximum profit.

Sample floating holiday policy - Free Template

All exempt employees receive two floating holidays each year along with the [Company Name]’s paid time off. These floating holidays are to be used for religious, cultural, federal, state, or personal holidays (work anniversary, employee birthday, etc.) during which the company remains open.

Current employees and new employees joining [Company Name] mid-year can avail the floating holidays from 1st January. New employees hired before 1st July would receive two floating holidays upon hire, while those hired after 1st July would receive one floating holiday.

Employees must specify the event for which the floating holiday would be used and apply at least 5 days before the said event. The employee can apply for the leave using the time off management system, which will be sent to their reporting manager for approval.

Floating holidays will not be carried over to the next calendar year nor encashed upon termination.

FAQs on floating holiday policy

What are some floating holidays listed in the policy?

Some examples of floating holidays include:

Christmas eve
New Year’s eve
Hanukkah
Eid
Diwali
Rosh Hashanah
Martin Luther King Jr. Day

What are the points to keep in mind while drafting floating holiday policy?

Mass absenteeism: It happens when all your employees decide to use the same floating holiday. Given that companies are working during floating holidays, it would mean there’s nobody taking care of the frontline work.
Loss of money: If you allow encashment of floating holidays, you may pay for the unused floating holidays when an employee leaves the company. This is in addition to the paid time off that the employee can encash.
Unnecessary paperwork: You will have to invest time and money in creating a floating holiday policy and more paperwork concerning leave encashment and leave carryover.

What is the difference between floating holidays and PTO?

Implementation of floating holidays has a lot of flexibility since there are no federal laws to oversee them. The implementation can vary based on the office location, the diversity ratio, and the PTO policy. Some of the common differences include:

Floating holidays are fixed and cannot be earned, whereas PTOs can be incentivized.
Floating holidays cannot be carried over to the next year.
Floating holidays are offered in lumpsum at the beginning of the year, whereas PTOs can be accrued through the year.

How to write a floating holiday policy?

[With a Sample policy]